KERX: Analyst Coverage a Boon for a Company Gaining More Attention

Keryx Pharmaceuticals' attractive pipeline, of which the two flagship products are both well into Phase III, definitely has the company and the KERX stock on many new radars lately, and the analysts are also starting to jump on board.

This month alone, both MLV Capital and Oppenheimer have initiated coverage of the company, and slapped tags of "Buy" and "Outperform" on the stock, respectively.

The newly minted analyst interest is definitely a positive indication for the company, although it's also worth pointing out that the best gains are to be had in the healthcare sector when these stocks are found before the analysts start jumping on board. By the time a company receives analyst coverage, the company has usually already realized significant gains. Case in point is KERX itself, as this stock was trading for below a buck less than two years ago.

Given that KERX has already posted significant gains, however, doesn't mean to say that there isn't any short or long term potential price appreciation left.

The two products, Zerenex for kidney disease and Perifisone as an anti-cancer agent, have both been highly successful in trials thus far, and hold significant market potential.

As the Phase III trials near an end, traders looking to play the short term milestone events will start jumping on board, which could lead to an uptick in price. At that point, even the long term investors could become short term traders by unloading some 'trading shares' to cover the investment against the possibility of bad news.

It's also my position that KERX, like Amarin Corporation PLC (NASDAQ:AMRN), Avanir Pharmaceuticals, Inc (NASDAQ:AVNR) and TITAN PHARMA INC (NASDAQ:TTNP), is going to be a solid acquisition target for big pharma. With two late stage products, and a market cap that is still relative chump change for the big players in the sector, KERX may not be around long enough as a stand-alone company to take either to market.

As long as KERX trades near its current levels, any offer should come at a very significant premium.

For the time being, I still see a push higher leading into Phase III results, especially with the stock receiving the additional attention of the recent analyst coverage.

Disclosure: I am long TTNP.OB.